Is it time to take a fixed rate?

Fixed rate mortgages look very good at the moment, the constant threat of rate rises looms in the distance so is it a good time to swap and lock?

A big deposit will get you a two-year fix below 2 per cent, a five-year fix below 3 per cent or a ten-year fix at less than 3.5 per cent. That’s cheap money.

Lenders have been busy cutting fixed mortgage rates since the end of summer, with the pick of the bunch some five-year fixed rate deals that are back at rock bottom levels.

Mortgage rates have been driven down by a combination of elements: low inflation, a fresh bout of eurozone fears, the belief that economic growth will slow and the heat coming out of the property market – especially in London.

All of this has pushed back expectations for when the first Bank Rate rise from 0.5 per cent will arrive. Last week, the Bank of England said the CPI measure of inflation could fall below 1%, highlighting low inflation as the challenge that means rates may not rise until autumn 2015. Subsequently, swap rates – which influence the cost of funding fixed rate mortgages on the money market – have taken a pronounced tumble.

Banks and building societies have also now broadly got to grips with the tougher new mortgage rules introduced in April. These produced a marked slowdown in lending, and now lenders are playing catch-up to meet this year’s lending targets and giving us Brokers some great deals to help them.

There are some catches, some lenders are charging massive arrangement fees which in some cases are worth paying however if you don’t have a big mortgage you may be better off with a slightly higher rate and lower or fee free deal.

It’s wise to also think carefully about whether you expect to move home soon. A good five-year fix should be portable, so you can take it with you. But your new property will need to be assessed and you might need to borrow extra money, and so your lender could still say no. Getting out of a fix typically requires a hefty hit to the pocket from early repayment charges.

You will also need to get your finances in order and be prepared for the lengthier application and interviews getting a mortgage requires nowadays.

Weigh up the above, have a scout around what the best deals look like – and of course give us a call. WE WILL HELP YOU DECIDED AND ARRANGE THE MORTGAGE WITHOUT CHARGING YOU A FEE AS WE ARE PAID BY THE LENDERS.

Today’s low rates may stick around, they may even inch a little lower, but they may be swiftly axed.

If you think you’d kick yourself if you miss out on one, set aside some time over Christmas to consider what to do. Call 01202 577718 and speak to an adviser we are open over Christmas and would love to hear from you.

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1. The above figures assume an annual reset type mortgage which recalculates mortgage payments once a year. As such they may slightly overstate the monthly payments for more flexible mortgages, offering monthly or even daily recalculation of payments.

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Rest Assured Mortgages does not charge fees for its service, we are paid a commission by the provider. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.